Apparel maker Tefron has swung to a net loss of US$0.7m for the first quarter of 2008, from a profit of $3.8m last year, as margins were struck by the devaluation of the US dollar versus the New Israeli shekel.

Quarterly revenues stood at $50.9m, Tefron said, 4.5% higher than the first quarter of last year.

The company, which manufactures seamless intimate apparel, active wear and swim wear, said the increased revenues were due to better sales of swimwear and an increase in sales of active-wear products.

These rises were partly offset by a reduction in sales of intimate apparel, Tefron added.

First quarter gross margin was 12.4% compared with a gross margin of 19.1% in the first quarter of 2007.

"The decline in gross and operating margins in the quarter compared with the first quarter of last year was primarily due to the significant devaluation of the US dollar versus the New Israeli shekel, the higher proportion of cut and sew products in the active-wear sales mix which have a lower profitability than those of the seamless products, and finally, the continuing short-term manufacturing challenges faced in the Hi-Tex division," the company stated.

Yos Shiran, chief executive officer of Tefron, said

Tefron added that it is hopeful of higher sales from new customer Maidenform as well as increased orders from Nike for its 'Next Generation' products.

Based on current orders, the company expects second quarter 2008 revenues of around $45m.

Tefron makes apparel for brands including Victoria's Secret, Nike, Target, The Gap, JCPenney, Lululemon Athletica, Warnaco/Calvin Klein, Patagonia, Reebok, Swimwear Anywhere, Abercombie & Fitch and El Corte Englese.